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Hancock Whitney (HWC) Gains as Q3 Earnings Beat Estimates
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Shares of Hancock Whitney Corp. (HWC - Free Report) gained 1.5% in after-market trading following the release of its third-quarter 2023 results. Earnings of $1.12 per share outpaced the Zacks Consensus Estimate of $1.02. However, the bottom line reflects a year-over-year decline of 27.7%.
Results were positively impacted by a marginal rise in non-interest income. The loan balance witnessed a slight sequential rise, which was another positive. However, lower net interest income (NII), higher expenses and significantly higher provisions were major headwinds.
Net income was $97.7 million, decreasing 27.8% year over year. Our estimate for the metric was $93 million.
Revenues Decline, Expenses Rise
Total revenues amounted to $355.2 million, down 2.9% year over year. The top line marginally lagged the Zacks Consensus Estimate of $355.7 million.
NII (on a tax-equivalent basis) declined 3.8% year over year to $272.1 million. The net interest margin (NIM) was 3.27%, which contracted 27 basis points. Our estimate for NII was $268.3 million. We had projected a NIM of 3.24% for the third quarter.
Non-interest income was $86 million, which increased marginally from the year-ago quarter. The rise was largely driven by increased trust fees, investment and annuity fees and insurance commissions, and other income. Our estimate for non-interest income was $85.4 million.
Total non-interest expenses increased 5.8% year over year to $204.7 million. We had projected expenses of $205 million.
The efficiency ratio increased to 56.38% from 51.62% in the year-ago quarter. A rise in the efficiency ratio reflects lower profitability.
As of Sep 30, 2023, total loans were $24 billion, up marginally from the prior quarter’s end. Total deposits also increased marginally on a sequential basis to $30.3 billion. Our estimates for total loans and deposits were $23.6 billion and $29.3 billion, respectively.
Credit Quality Worsens
The provision for credit losses was $28.5 million, rising significantly from the prior-year quarter. Our estimate for provisions was $27.1 million. Net charge-offs (annualized) were 0.64% of average total loans, up from 0.02% in the prior-year quarter.
Capital Ratios Improve, Profitability Ratios Worsen
As of Sep 30, 2023, the Tier 1 leverage ratio was 10.01%, up from 9.27% at the end of the year-earlier quarter. The common equity Tier 1 ratio was 12.04%, up from 11.10% as of Sep 30, 2022.
At the end of the third quarter, the return on average assets was 1.09%, down from the year-ago period’s 1.56%. The return on average common equity was 10.85%, down from 15.77% in the prior-year quarter.
Share Repurchase Update
In the reported quarter, HWC did not repurchase any shares.
2023 Outlook
Management expects total loans to grow in the low to mid-single-digit range. The company expects total deposit growth to be in the flat to low-single-digit range.
Hancock Whitney expects operating pre-provision net revenues (PPNR) to decrease 1-3% from 2022.
HWC expects NIM compression of 3-5 bps in the fourth quarter of 2023.
Non-interest income is expected to be up 1-2% from that reported in 2022. Fourth-quarter non-interest income is anticipated to be marginally down sequentially.
Management expects the efficiency ratio to remain below 56%.
Operating expenses are anticipated to be up 7.5-8.5% year over year. The guidance excludes any expected special FDIC assessment costs related to the bank failures.
Hancock Whitney expects low to modest charge-offs and provisions for the remainder of 2023.
The company expects an effective tax rate of 21%.
Our View
With a strong balance sheet position, Hancock Whitney is well-poised for growth. Backed by higher interest rates and decent loan demand, the company is expected to witness growth in NII in the quarters ahead. However, mounting expenses and expectations of an economic slowdown are major headwinds.
Hancock Whitney Corporation Price, Consensus and EPS Surprise
Citigroup Inc.’s (C - Free Report) third-quarter 2023 earnings per share (excluding divestiture-related impacts) of $1.52 outpaced the Zacks Consensus Estimate of $1.26.
In the quarter, Citigroup witnessed a rise in revenues, driven by higher revenues in the Institutional Clients Group, as well as the Personal Banking and Wealth Management segments. Higher cost of credit was a spoilsport for C.
Support from higher interest rates, the First Republic Bank deal, robust consumer and commercial banking businesses and solid loan balance drove JPMorgan’s (JPM - Free Report) third-quarter 2023 earnings to $4.33 per share. The bottom line handily outpaced the Zacks Consensus Estimate of $3.89.
The results included net investment securities losses and legal expenses. After excluding these, JPM’s quarterly earnings were $3.94 per share.
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Hancock Whitney (HWC) Gains as Q3 Earnings Beat Estimates
Shares of Hancock Whitney Corp. (HWC - Free Report) gained 1.5% in after-market trading following the release of its third-quarter 2023 results. Earnings of $1.12 per share outpaced the Zacks Consensus Estimate of $1.02. However, the bottom line reflects a year-over-year decline of 27.7%.
Results were positively impacted by a marginal rise in non-interest income. The loan balance witnessed a slight sequential rise, which was another positive. However, lower net interest income (NII), higher expenses and significantly higher provisions were major headwinds.
Net income was $97.7 million, decreasing 27.8% year over year. Our estimate for the metric was $93 million.
Revenues Decline, Expenses Rise
Total revenues amounted to $355.2 million, down 2.9% year over year. The top line marginally lagged the Zacks Consensus Estimate of $355.7 million.
NII (on a tax-equivalent basis) declined 3.8% year over year to $272.1 million. The net interest margin (NIM) was 3.27%, which contracted 27 basis points. Our estimate for NII was $268.3 million. We had projected a NIM of 3.24% for the third quarter.
Non-interest income was $86 million, which increased marginally from the year-ago quarter. The rise was largely driven by increased trust fees, investment and annuity fees and insurance commissions, and other income. Our estimate for non-interest income was $85.4 million.
Total non-interest expenses increased 5.8% year over year to $204.7 million. We had projected expenses of $205 million.
The efficiency ratio increased to 56.38% from 51.62% in the year-ago quarter. A rise in the efficiency ratio reflects lower profitability.
As of Sep 30, 2023, total loans were $24 billion, up marginally from the prior quarter’s end. Total deposits also increased marginally on a sequential basis to $30.3 billion. Our estimates for total loans and deposits were $23.6 billion and $29.3 billion, respectively.
Credit Quality Worsens
The provision for credit losses was $28.5 million, rising significantly from the prior-year quarter. Our estimate for provisions was $27.1 million. Net charge-offs (annualized) were 0.64% of average total loans, up from 0.02% in the prior-year quarter.
Capital Ratios Improve, Profitability Ratios Worsen
As of Sep 30, 2023, the Tier 1 leverage ratio was 10.01%, up from 9.27% at the end of the year-earlier quarter. The common equity Tier 1 ratio was 12.04%, up from 11.10% as of Sep 30, 2022.
At the end of the third quarter, the return on average assets was 1.09%, down from the year-ago period’s 1.56%. The return on average common equity was 10.85%, down from 15.77% in the prior-year quarter.
Share Repurchase Update
In the reported quarter, HWC did not repurchase any shares.
2023 Outlook
Management expects total loans to grow in the low to mid-single-digit range.
The company expects total deposit growth to be in the flat to low-single-digit range.
Hancock Whitney expects operating pre-provision net revenues (PPNR) to decrease 1-3% from 2022.
HWC expects NIM compression of 3-5 bps in the fourth quarter of 2023.
Non-interest income is expected to be up 1-2% from that reported in 2022. Fourth-quarter non-interest income is anticipated to be marginally down sequentially.
Management expects the efficiency ratio to remain below 56%.
Operating expenses are anticipated to be up 7.5-8.5% year over year. The guidance excludes any expected special FDIC assessment costs related to the bank failures.
Hancock Whitney expects low to modest charge-offs and provisions for the remainder of 2023.
The company expects an effective tax rate of 21%.
Our View
With a strong balance sheet position, Hancock Whitney is well-poised for growth. Backed by higher interest rates and decent loan demand, the company is expected to witness growth in NII in the quarters ahead. However, mounting expenses and expectations of an economic slowdown are major headwinds.
Hancock Whitney Corporation Price, Consensus and EPS Surprise
Hancock Whitney Corporation price-consensus-eps-surprise-chart | Hancock Whitney Corporation Quote
Currently, Hancock Whitney carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Major Banks
Citigroup Inc.’s (C - Free Report) third-quarter 2023 earnings per share (excluding divestiture-related impacts) of $1.52 outpaced the Zacks Consensus Estimate of $1.26.
In the quarter, Citigroup witnessed a rise in revenues, driven by higher revenues in the Institutional Clients Group, as well as the Personal Banking and Wealth Management segments. Higher cost of credit was a spoilsport for C.
Support from higher interest rates, the First Republic Bank deal, robust consumer and commercial banking businesses and solid loan balance drove JPMorgan’s (JPM - Free Report) third-quarter 2023 earnings to $4.33 per share. The bottom line handily outpaced the Zacks Consensus Estimate of $3.89.
The results included net investment securities losses and legal expenses. After excluding these, JPM’s quarterly earnings were $3.94 per share.